The Lessons of Qualcomm: A Wake Up Call for the Legal Profession

Qualcomm v. Broadcom is much more than another e-discovery case gone bad. It is an integrity wakeup call for the entire legal profession, much like Enron and Arthur Anderson were for business and accounting. Qualcomm shows what can happen when the profession strays too far from its roots, and the pursuit of profits takes precedence over the pursuit of justice. Some law firms may well be big businesses, but that is never all that they are. They are first and foremost professional associations. If they act like businesses, then it should be in the tradition of the London Stock Exchange, whose motto since 1801 has been: “dictum meum pactum.” All of the top attorneys I have ever known have practiced this motto religiously. It means “my word is my bond.” When a real lawyer tells you something, you can take it to the bank. Isn’t that the kind of lawyer you want? Isn’t that the kind of lawyer society needs? But See: Qualcomm, Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal. Jan. 7, 2008) (one of several relevant decisions in this case).

I have written on Qualcomm many times already, and am now resigned to doing so for a long time to come. Yes, I now think it is that important. See Eg. the following prior blogs:

At the West Legalworks A-Z E-Discovery CLE that I recently wrote about, John M. Barkett of Shook, Hardy & Bacon started the event with a very good explanation of the facts of Qualcomm v. Broadcom.Every presenter in this day and a half event had something to say about Qualcomm. The only exception was the chair of this CLE, Browning E. Marean, whose law firm DLA Piper now represents Qualcomm in that case. His lips were sealed, and he said nothing, but still squirmed mightily. Everyone who spoke agreed that Qualcomm is the major case of the year, not just for e-discovery practitioners, but for all litigators.

Factual Summary of Qualcomm

I will not recite all of the details of the case again, but a very brief summary of the amazing facts of this case may be helpful. Qualcomm sued its rival Broadcom claiming infringement of two of its key patents. Broadcom defended by claiming the patents were invalid because they were developed at the time Qualcomm was participating in an international standards setting group called the “Joint Video Team.” Qualcomm denied participating in this team. Numerous discovery requests were made for Qualcomm to produce documents related to this defense. Qualcomm repeatedly denied having any such documents, consistent with their position that they never participated.

After years of discovery, where that party line was consistently upheld by all Qualcomm witnesses, and all responses to discovery requests, the case went to trial. After weeks of trial a Qualcomm witness, Viji Raveendran, admitted on cross exam to having 21 emails related to Qualcomm’s participation in the standards setting team. It was later discovered that Raveendran had told Qualcomm’s lawyers about these 21 emails as part of final preparation for her trial testimony, and Qualcomm’s outside counsel had seen the emails, but decided to hide them, and hope it would not come up on cross. According to the trial judge, the direct exam questions of this honest witness by Qualcomm’s attorney were carefully designed to avoid asking Raveendran any question that might cause her to reveal the existence of those 21 emails.

Right after the surprise admission by Raveendran to 21 emails, Broadcom’s attorney immediately complained to the judge. The judge summoned counsel to a sidebar conference. Qualcomm’s attorneys assured the court that they had looked at these emails, and they were not responsive, and that there was no cover-up as Broadcom was now alleging. The judge accepted these assurances by the prominent and senior trial attorney conducting the case, dictum meum pactum, and the trial continued. Days later the jury found for the defendant. The jury foreman later explained that they all knew Qualcomm employees were lying and it was an easy decision.

After trail, at Broadcom’s urging, the judge ordered a complete investigation into whether there had been an email cover-up. Turns out, there had been, big time! Also, that sidebar representation by prominent counsel was, according to the presiding trial judge, a lie. After trial, Broadcom proved that Qualcomm had not only lied about and hid 21 emails, they had hidden over 46,000 emails with attachments comprising over 200,000 pages of relevant evidence! Naturally, both the court and defendant were astonished and upset, to say the least.

It is one thing to hide the ball, but to hide 200,000 balls and almost get away with it; that’s pretty impressive in a twisted Dr. Evil sort of way. Still, in this case at least, they were caught and crime did not pay. Qualcomm was stripped of it patents and ordered to pay $8,568,633.24 in fees to the prevailing defendant, Broadcom. By the way, patent litigation between these two companies continues in other courts around the country, and I do not have to tell you what kind of credibility Qualcomm now has with the courts.

This post trial discovery of a cover-up led to sanctions motions against Qualcomm and it attorneys. The District Court referred them to the Magistrate. Of course, Qualcomm had by now fired their former attorneys, and now they were each blaming the other for the massive fraud on the court. Qualcomm then asserted its attorney-client privilege, and the Magistrate agreed, effectively gagging Qualcomm’s outside counsel from testifying about what their client had told them. Six of the many outside counsel representing Qualcomm were then sanctioned by the Magistrate, and referred to the California Bar for further action. On appeal this sanction was reversed by the District Court Judge who held that Qualcomm’s attorney-client privilege was subject to the self-defense waiver. For a good explanation of this, see Kevin McBride’s blog e-Discovery LA.

The case has now been remanded for a new trial where outside counsel, and in-house counsel, can now freely testify as to who told who to hide what. John characterized the upcoming proceedings as a “circular firing squad.” As an aside, John has just written an article on e-Discovery ethics that he handed out to the A-Z participants. It will be published by the ABA Litigation Section later this year and provides a much needed overview of the subject.

Lessons of Qualcomm

The faculty of the A-Z CLE all agreed that the moral of the Qualcomm story is not only that hide the ball is prohibited by the rules and all governing ethics, but so too is never even look for the ball to begin with. You should instead make a reasonable inquiry and disclose all responsive evidence that this inquiry uncovers. Moreover, you should develop methodologies and lists to help make sure your search and disclosure duties are properly discharged. It is never in the client’s best interests to lie or break the rules, even if some of your client’s employees may sometimes think so. If the client does not want you to reveal evidence that will ruin the client’s case, then you must counsel with them and persuade them otherwise. As the Judge clearly states in Qualcomm, if the client will still not comply, you must resign. AlsoSee United States v. Johnson, 2008 WL 2060597 (E.D.Va. May 15, 2008) (Defense attorney resigns midtrial when he discovers that his client has produced forged emails. After a mistrial the court applied the crime-fraud privilege exception and required the attorney to explain why he resigned. The defendant was later convicted of obstruction of justice, along with the original charges. Interestingly, the emails were forged to try and hide information in connection with a fraud investigation into the defendant’s company, PurchasePro.com, led by Arthur Anderson and Heller Ehrman.)

Kevin McBride has also written on the steps you should take to avoid the mistakes of Qualcomm. Aside from the obvious, but sometimes elusive, advice to tell the truth, Kevin recommends, as do I, to form an e-discovery team and establish a “discovery plan” at the beginning of a case. According to Kevin the plan should include at least ten items:

A detailed inventory and map of the client’s ESI and IT infrastructure.

A list of all resources searched for relevant ESI, plus a list of potentially relevant sources not searched not searched because of accessibility problems.

A list of all search terms and methodologies used to identify relevant ESI.

“A list of all persons to whom discovery requests were circulated for review in advance of production.”

“Policies to periodically monitor preservation compliance by the client and client’s agents.”

“Policies to supplement discovery searches (and productions) when “red flag” information becomes known over the course of litigation that suggests new document resources or custodians need to be included in document production.”

“A policy for counsel to re-check the current state of discovery plan compliance before signing additional discovery responses or pleadings or making important arguments in court.

Outside counsel, at all levels of authority, who rely on a client’s search and retrieval of electronically stored information, are obligated to ask probing questions, audit the search and retrieval, and confirm that all potential sources of information have been investigated. To paraphrase the court in Qualcomm, if a junior attorney who is unable to get a client to conduct the type of search he or she deems necessary to verify the adequacy of the document search and production, then he or she should obtain the assistance of a supervising or senior attorney. If the supervising or senior attorney is not able to get the client to perform a competent and thorough document search, he or she would withdraw from the case or take other action to ensure production of the evidence. [Qualcomm, Inc. v. Broadcom Corp., No. 05cv1958-B (BLM), 2008 WL 66932 (S.D. Cal. Jan. 7, 2008) at *13, n.10.]. Another solution may be to insist that in-house counsel appear in the case and sign the discovery responses if the client is not providing sufficient verification of the search and retrieval process. Although outside counsel may also consider some sort of indemnification agreement with the client, such an agreement does not relieve counsel from his or her ethical obligations.

I am not sure I understand what Greg had in mind about an indemnity agreement, but do not think anything like that is a good idea. What kind of attorney client relationship would that be? How exactly would a client indemnify an attorney from disregarding their duties to the court? Would such an agreement be enforceable? Do we really want opposing counsel and the courts to wonder if our representations on discovery are mere empty promises emboldened by secret hold-harmless agreements? No, I certainly hope the profession does not go in that direction. Ethics and professionalism are not something that can be papered over with clever agreements.

But Greg’s other suggestion to have in-house appear of record and sign discovery responses is practical and could work. Still, outside counsel would have to beware of falling into a trap of the three “no evil” monkeys and a conspiracy of silence. “Turning a blind eye” may have worked for Admiral Horatio Nelson, but will not work for lawyers. The attorney-client relationship must be built on full and open communications. It must be built on trust

One effect of the Qualcomm v. Broadcom case is that it has introduced distrust and suspicion into relationships. It has adversely impacted the relationship between inside and outside counsel in a profound way.

Mary concludes her comments on this topic with a similar suggestion to Greg’s, that in-house attorneys may want to protect themselves with indemnity agreements and insurance:

Finally, inside counsel may experience a greater demand from law firms for an agreement that the client will waive the privilege if they need to defend themselves. And, inside counsel will have to consider their own liability in such matters and may wish to consider protecting themselves with insurance and/or a company indemnification agreement.

I do not think carriers will insure for the kind of behavior evidenced in Qualcomm. Some companies may go in that direction, but I think it is a mistake. The only viable solution is client education and counseling. The relationships of attorneys, both internal and external, must be built on honesty and trust.

We must all remember and follow the motto of the London Stock Exchange: dictum meum pactum. This is not an outdated concept. It is the bedrock of the American system of justice. I am not saying to avoid written agreements. That is not at all what it means. Dictum meum pactum means to be honest, truthful, and keep your commitments. It is the essence of trust and good reputation.

In the world of litigation, dictum meum pactum means that if an attorney makes a representation in Court to the Judge about discovery, or anything for that matter, it must be true, it must be substantial. There is no room for half truths and partial disclosure buttressed by secret indemnity agreements. If, for instance, you tell the court you made reasonable efforts to find relevant email, mean it, and be prepared to prove it. People may differ on what is reasonable under the circumstances. That is to be expected. If the court sees a good faith effort, albeit not diligent enough in their eyes, the response should be mild. But if you have found email and are hiding it, it is not a matter of a difference of opinion, it is a matter of honesty. If you compound the error with lies to the court and opposing counsel, the sanctions should be harsh.

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[…] and Arthur Anderson were for business and accounting. Qualcomm shows what can happen when the profehttps://ralphlosey.wordpress.com/2008/06/01/the-lessons-of-qualcomm-a-wake-up-call-for-the-whole-lega…Ethics, business experts urge corporate honesty (The Oklahoman)The ouster of embattled Lehman […]

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Email Comment by David Ingraham, Jury Foreman.
(Posted with his permission by Ralph Losey)

A very interesting article! Clearly this case is having a profound impact on the whole field of e-discovery. When we sat on the jury we had no idea how widespread the ramifications of this case would be.

I do think that you may have missed one critical lesson from the case:

Never be so naive as to assume the you can bring a baseless case to trial and win a verdict solely because the complexity of the facts at issue will baffle the jurors.

The issue of the alleged infringement was really decided in the first three days of the plaintiff’s testimony. After that the rest of the three week trial was just resolving the issues of the validity and enforceability of the patents. Most of the eleven other jurors on this case were able to see that the testimony of Qualcomm’s witnesses stretched credibility beyond any reasonable boundary. The reported six hours of deliberation actually exaggerates the time required to reach our verdicts. We spent perhaps two and a half of those hours being instructed on how to contact the court, ordering and eating lunch, and waiting for all the parties to reassemble in the courtroom to hear the verdict. The most contentious part of the deliberations revolved around the finding that the Patent Office was not in error in granting the original patents. This finding would have been virtually impossible according to the judge’s instructions. Nevertheless some jurors were so angry at Qualcomm that they wanted to punish them with a verdict which appeared to be certain to be overturned.

[…] who teaches e-discovery at the University of Miami, cited another e-discovery horror story from Broadcom Corp. v. Qualcomm Inc., where a jury verdict said that document production missed 46,000 documents representing 300,000 […]

About the Blogger

Ralph Losey is a practicing attorney and shareholder in a national law firm with 50+ offices and over 800 lawyers where he is in charge of Electronic Discovery. All opinions expressed here are his own, and not those of his firm or clients. No legal advice is provided on this web and should not be construed as such.

Ralph has long been a leader of the world's tech lawyers. He has presented at hundreds of legal conferences and CLEs around the world. Ralph has written over two million words on e-discovery and tech-law subjects, including seven books. He is also the founder of Electronic Discovery Best Practices, and e-Discovery Team Training, an online education program that arose out of his five years as an adjunct professor teaching e-Discovery and Evidence at the UF School of Law. Ralph is also publisher and principle author of this blog and many other instructional websites.

Ralph is a specialist who has limited his legal practice to electronic discovery and tech law since 2006. He has a special interest in software and the search and review of electronic evidence using artificial intelligence, and also in general AI Ethics. issues. Ralph was the only private lawyer to participate in the 2015 and 2016 TREC Recall Track of the National Institute of Standards and Technology and prior to that competed successfully in the EDI Oracle research.

Ralph has been involved with computers, software, legal hacking and the law since 1980. Ralph has the highest peer AV rating as a lawyer and was selected as a Best Lawyer in America in four categories: Commercial Litigation; E-Discovery and Information Management Law; Information Technology Law; and, Employment Law - Management. Ralph also received the "Most Trusted Legal Advisor" industry award for 2016-17 by the Masters Conference. His full biography may be found at RalphLosey.com.

Ralph is the proud father of two children, Eva Losey Grossman, and Adam Losey, a lawyer with cyber expertise (married to another cyber expert lawyer, Catherine Losey), and best of all, husband since 1973 to Molly Friedman Losey, a mental health counselor in Winter Park.

Sedona Principles 3rd Ed

1. Electronically stored information is generally subject to the same preservation and discovery requirements as other relevant information.

2. When balancing the cost, burden, and need for electronically stored information, courts and parties should apply the proportionality standard embodied in Fed. R. Civ. P. 26(b)(2)(C) and its state equivalents, which require consideration of importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

3. As soon as practicable, parties should confer and seek to reach agreement regarding the preservation and production of electronically stored information.

4. Discovery requests for electronically stored information should be as specific as possible; responses and objections to discovery should disclose the scope and limits of the production.

5. The obligation to preserve electronically stored information requires reasonable and good faith efforts to retain information that is expected to be relevant to claims or defenses in reasonably anticipated or pending litigation. However, it is unreasonable to expect parties to take every conceivable step or disproportionate steps to preserve each instance of relevant electronically stored information.

6. Responding parties are best situated to evaluate the procedures, methodologies, and technologies appropriate for preserving and producing their own electronically stored information.

7. The requesting party has the burden on a motion to compel to show that the responding party’s steps to preserve and produce relevant electronically stored information were inadequate.

8. The primary source of electronically stored information to be preserved and produced should be those readily accessible in the ordinary course. Only when electronically stored information is not available through such primary sources should parties move down a continuum of less accessible sources until the information requested to be preserved or produced is no longer proportional.

9. Absent a showing of special need and relevance, a responding party should not be required to preserve, review, or produce deleted, shadowed, fragmented, or residual electronically stored information.

10. Parties should take reasonable steps to safeguard electronically stored information, the disclosure or dissemination of which is subject to privileges, work product protections, privacy obligations, or other legally enforceable restrictions.

11. A responding party may satisfy its good faith obligation to preserve and produce relevant electronically stored information by using technology and processes, such as data sampling, searching, or the use of selection criteria.

12. The production of electronically stored information should be made in the form or forms in which it is ordinarily maintained or in a that is reasonably usable given the nature of the electronically stored information and the proportional needs of the case.

13. The costs of preserving and producing relevant and proportionate electronically stored information ordinarily should be borne by the responding party.

14. The breach of a duty to preserve electronically stored information may be addressed by remedial measures, sanctions, or both: remedial measures are appropriate to cure prejudice; sanctions are appropriate only if a party acted with intent to deprive another party of the use of relevant electronically stored information.